Florida Has At Least $48.79 Billion In Surpluses of the Taxpayers Money it is not using.

  FY 2003 Report Home Page Flags courtesy of Robesus Inc.



The State of Florida at the State-level has approximately $48.79 billion of the taxpayer's money it is not using, i. e. surpluses equal to $2,843 for every man, woman and child in Florida or $11,374 for a family of 4. This does not include all the additional surpluses that exist in the school districts, cities, or counties in Florida.

The Exhibit A below shows the results of the FY 2003 review.

What are these surpluses we refer to?

Government surpluses, as used in this report, are funds that are not required or needed for the operation of all government operations, funds, accounts, agencies, etc., directly or indirectly, for the year(s) covered by the budget which is usually one year. Theoretically, at the end of every fiscal year, governments should have little or no cash/investments on hand. But what we have found is that most governments have huge amounts of cash and investments on hand at the end of the fiscal year. And somehow these cash and investments are not being recycled back through the budget process the next year, but are being held year-after-year.

A Government Can Have a Budget Deficits/Shortfalls and Financial Surpluses At The Same Time.

This is the most deceiving topic that governments, politicians, and the news media have conveyed to the public about governmental financial matters. In realty, a government can simultaneously have a budget shortfall and a financial surplus of the taxpayers' money.

The problems are focused in four areas:

1. The budget only covers a small portion of the State's financial condition. There are a group of funds not part of the budget process. The complete list of funds and budgetary requirements are found in the Comprehensive Annual Financial Report (CAFR). This report depicts the complete financial status of the State. The budget only covers a portion of the financial resources of the government.

A Little Background:

The CAFR usually has four categories.

Governmental Funds
Proprietary Funds
Fiduciary Funds
Component Units

Governmental Funds involve activities of the government including most basic services such as environmental resources, general government, transportation, education, health and human services, and protection of persons and property. Most of the cost of these activities are financed by taxes, fees , and federal grants.

Proprietary Funds are used when a government charges customers for the services it provides, whether to outside customers or to other agencies with the state. For example, Enterprise Funds, a component of proprietary funds, are for activities that provide goods and services to outside (non-government) customers, which includes the general public. Fees, charges for services or goods, assessments, fines, licenses, etc. are the major revenue sources.

Fiduciary Funds are activities in which the state acts as a trustee or fiduciary to hold resources for the benefit of others. These funds are pension trust funds, investment trusts, and agency funds (which are for assets held for distribution by the government as an agent for other governmental units, other organizations, or individuals).

Component Units reportedly are legally separated organizations for which the government is financially accountable. Usually fees, charges for services or goods, assessments, fines, penalties, licenses, etc. are the major revenue source.

The budget, as commonly known to the public, only involves the Governmental Funds and may not even include all of the governmental-type funds. The remainder of the Funds shown above are not part of the budget and are commonly called "off-budget" items.

2. Next year's budget consists only of next year's estimated revenues and next year's estimated expenditures. Previous years' revenues not used (spent) are normally not considered in the next year's budget, but should be. In other words, the previous years' revenues (as shown in the CAFR) are not recycled back to the budget process.

Historically, a budget consists of three parts: 1) Funds brought forward (funds not previously spent); 2) Next year's estimated revenues; and 3) Next year's estimated expenditures.

But somewhere along the way the funds brought forward category was lost. In accounting, the previous years' revenues are no longer called revenue but have been converted to Cash and Investments. Since they no longer called Revenues governments have forgotten about them to the public. They are there but not considered in the budget process, but should be.

Florida does use the balance brought forward in its budget process, which is good. However, they tend to over budget for expenditures and carry a fund balance.

3. The budgeted items and non-budgeted items (off budget) should be budgeted to zero (usually referred to as zero-based budgeting). In addition, the government should be on a pay-as-you-go basis, no reserves for future years. What this means is that you budget to have a zero fund balance. If you plan to spend $100 you budget for $100 with no excess or reserve allowed.

For example, the State of Florida Special Revenue Funds (Governmental Funds), considered part of the budget, had FY 2002 fund balances of $751 million. In FY 2003, they had fund balances of $1.26 billion. That is an increase of $509 million, a huge increase.

4. Budgeted expenditures should be last year's expenditures (as shown in the CAFR) with an adjustment for increase in requirements (costed out) or reductions in requirements. In most cases the CAFR expenditures are not considered in the next year's budget because the CAFR in many cases is published after next year's budget is considered and sometimes approved.

Running Surpluses is Stealing

Although taxation is legitimate, running a government surplus isn't. It represents a taking by the state, because it exceeds the government's contract with the community. It is no different than if a federal agency were to take a person's land or possessions without just compensation (an activity barred by the Fifth Amendment). Excess taxation isn't what the people bargained for.

In presuming entitlement or authority not ceded by the community, the state abrogates its moral pact with those it governs. Its power is no longer derived from the people, whose rights to liberty and property it boldly denies.

The Governor and the Legislators

The Governor and the legislators should include in the next year's budget the previous years revenues not spent as indicated by the CAFR. These were once a revenue and should still be considered revenue for budgetary purposes.

Also, they should consider a zero-balance budget concept for all budget and non-budgetary items in the CAFR including the College and Universities and the Component Units.

Budgeted expenditures (for the budget) should be last year's expenditures (from the CAFR) adjusted for demonstrated requirement changes in project, program or services. An increase in requirements should include the costs of these additional requirements. Conversely, a decrease in requirements should result in a decrease in costs associated with the decreased requirements.

The Governor and legislators should take into consideration the entire financial condition/status of the State in the budgetary process by including all of the funds in the CAFR as being a part of the budget.

This system is covered in the CAFR Budget System. This system needs to be implemented in all governments.

If the State holds the excesses/surplus, it will earn 4% to 5% on that money. If the State returns the money to the people it will receive 20% in revenue because of the increased economic activity. This is elementary economics.

Laws need to be changed.

Every thing done by governments is by law. There are laws that state this or that regarding the use of some of the funds. Man made the laws, man can change the laws. How much effort would it be to include at the end of every law "...or if considered excess or not needed for the current operation that the funds will be refunded to the taxpayers?" See how easy it is.

At one time every law had its place, but things change. The laws need to be reviewed for change to meet the current needs of the government and the people to release these funds for use/refunded.

If this were accomplished, the State would have a huge surplus to refund (rebate or tax reductions) to the taxpayers. Such a refund would create considerable wealth and jobs, increase wages, increase State and local government revenues, dramatically increase the economy, and create the greatest economic expansion in the history of the State. Everyone wins.

If you want to know the financial condition of your government(s), do not look at the budget. Get the CAFR.

The Synergistic Magic of Economics.

What happens when the government holds the $48.79 billion.

  (In Thousands) Investment Income   Per   Capita Family of 4    
  The government holds and investments the surpluses at 4.5%. 2,195,707 128 512  

Here is what happens when the $48.79 billion is returned to the taxpayers (the private economy).

  (In Thousands) Surplus
Per   Capita Family of 4    
  The surplus is returned to the taxpayers. 48,793,487 2,843 11,374  
  Wages are increased. 24,396,743 1,422 5,687  
  State government revenues increase. 11,024,237 642 2,570  
Local government revenues increase. 8,819,389 514 2,056  
  Federal government revenues increase. 22,048,473 1,285 5,140  
  Total Benefits...   6,706 26,826  

In addition, 1,102,424 jobs are created. This is why it is disastrous for governments to hold excesses/reserves of the taxpayers money.

Note: The economic impact analysis is further explained at Economic Impact Analysis.

The business community suffers the most.

Before the 9-11 tragedy, President Bush and Congress provided tax rebates which averaged $427 for every American. This was to create an additional $60 billion in consumer (economic) spending, turn the economy around and create jobs for the unemployed. However, 9-11 change that.

As the above economic impact chart shows, if the State returned the $48.79 billion in surpluses to the people the State economy would grow by $6,424 per capita. That is 15 times the amount the Federal government used to stimulate the U.S. economy. Businesses net incomes could double or triple. This is elementary economics.


The Health and Family Services, a Governmental Fund, had net expenditures of $181 million. It also had reserves (cash and investments) of $861 million. That represents 5 years of reserves.

The University of Florida, a Component Unit and not part of the budget, had net expenses of $410 million and cash and investment reserves of $2.2 billion. The reserves represent 5 years of expenditures.

Citizens Property Insurance Corporation, another Component Unit and not part of the budget made a profit of $473 million . It had reserves of $3.5 billion.

Internal Service Funds are government activities that charge other government agencies/departments for goods and services they provide. Other words, this is entirely in-house operations. Communications and Facilities, an Internal Service Fund, made a profit of $7.6 million and had cash/investment reserves of $104 million.

These only represent four of the 57 funds shown below that had cash and investment reserves not being used.

What to do?

Unless the budget flaws are corrected and the entire State finances are used in the budget process, the problems that created the surpluses will continue to exist. The budget deficits reported by the Governor and legislatures will be used year after year for the excuses for tax increases and/or to reduce needed services.

Just stopping a tax increase or a reduction in services will not solve the problems. The problems will come back the next year.

I have provided the details of the surpluses and explained the ways the surpluses are accumulated. The data is accurate because it comes directly from the government's own financial statement, the CAFR. You must provide the where-with-all to convince the Governor and legislatures that the surpluses exist and what should be done about it. I live in Arizona. It is not my money that is at stake.

Exhibit A

The 2003 CAFR is located at:


Items not Included

The following items are not included in the amount of surplus shown:

-Buildings, roads, bridges, land (not for sale), and equipment.

-Deferred compensation plans for employees. These are plans in which the employee contributes to his/her retirement over and above the normal employee retirement contribution.

-Any fund that is 100% supported by donations, bequests, gifts, endowments, etc. These are not taxpayers money.

-For Colleges and Universities. All endowment and similar-type funds should not be included as surpluses. Sometimes these funds are combined with other college/university funds. We are interested in surpluses, so in these cases the total amount should not be included.

-Funds in which the revenues/contributions are 100% held for other individuals, organizations or another government.

-Funds that are required by law in which a bank, financial institution, insurance companies, etc. are required to deposit with the government a certain amount for insurance against the entity going bankrupt. These are not taxpayers' money.

-Retirement/Pension Funds - only included are 1/2 of the actuarially determined excesses, the taxpayers portion. The other 1/2 is the government employees portion.

  Review of The State of Florida CAFR- FY 2003

CAFR Page List of Investments By Fund (In thousands) Surpluses Notes
  Governmental Funds:    
28    General 4,046,490  
28    Environment, Recreation and Conservation 1,837,565  
28    Health and Family Services 860,802  
28    Transportation 796,976  
28    Public Education 1,576,053  
29    Tax Collection and Administration 553,218  
29    Employment Services 321,025  
29    Lawton Chiles Endowment Fund 1,881,631  
     Special Revenue Funds:    
134       Government Administration 76,363  
134       Business and Community Development 68,282  
134       Regulation and Licensing 175,501  
134       Tobacco Settlement 32,779  
134       Public Safety 82,073  
135       Corrections 28,034  
135       Consumer Protection and Safety 22,073  
135       Agriculture 51,353  
135       Juvenile Justice 38,226  
135       Judicial Services 24,607  
135       Military and Veterans' Affairs 16,156  
136       Citrus Commission 29,618  
136       State Board of Administration    
136       School For the Deaf and Blind 9,412  
136       Wireless Emergency Telephone System 89,689  
136       Workforce Florida Inc. 12,250  
137       Florida Water Pollution Control Financing Corporation 173,194  
137       Inland Protection Financing Corporation 11,471  
137       Investment Fraud Restoration Corporation 981  
137       Surplus Lines 5,065  
137       Partnership in Correctional Excellence 271  
   Capital Projects Funds:    
158       General Government    
158       Right-Of-Way and Bridge Construction 21,747  
158       Juvenile Justice    
158       Health Services 653  
158       Agriculture 102  
159       Veterans' Affairs 102  
159       School for the Deaf and Blind 2,315  
159       Other 169  
130    Debt Service Fund 89,271  
  Proprietary Funds:    
     Enterprise Funds:    
38       Transportation 570,316  
38       Lottery 4,224,129  
38       Unemployment Compensation 1,642,785  
38       State Board of Administration 5,832,696  
164       Other 220,161  
164       Florida Engineer Management Corporation 185  
     Internal Services:    
170       Data Centers 18,287  
170       Communications and Facilities 104,137  
170       Other 3,875  
  Fiduciary Funds    
   Private Purpose Trust Funds:    
176       Trust Escrow Administration 828,101  
176       Unclaimed Property    
176       Student Loan Guaranty Reserve    
176       Florida Prepaid College Program    
177       Other    
   Pension: (1/2 the actuarial determined excess)    
124       Pension Trust Fund (July 1, 2003) 6,327,697  
181       Deferred Compensation Plan    
181       Employee Health, Life and Disability Plans    
181       Retiree Health Insurance Subsidy    
   Agency Funds    
189       Treasury Investment Administration 3,690,132  
189       Tax Distribution and Administration    
189       School for the Deaf and the Blind    
189       State Board of Administration    
189       Other    
48       Investment Trust Fund   1
  Component Units:    
52    Florida Housing Finance Corporation 1,614,486  
52    South Florida Water Management District 349,885  
52    University of Florida 2,158,874  
52    Florida State University 929,973  
53    University of South Florida 673,443  
53    Citizens Property Insurance Corporation 3,535,138  
195    Other Water Management Districts 339,417  
195    Other State Universities 1,138,684  
195    Community Colleges 1,134,781  
195    Other Nonmajor Component Units 520,788  
  Total Surpluses… 48,793,487  
  Per Capita… 2,843  
  Family of 4… 11,374  
1 Page 47 of the CAFR states: $17,903,006  

This blended component unit includes the internal reporting funds used to account for the external portion of investment pools reported by the State."


I am not sure what that means. However, Page 63 states:


"Investment Trust Fund- used to report the external portion of investment pools reported by the State."


Also on Page 63 it states:


"…Investments of the Local Government Surplus Funds Trust Fund, a Securities and Exchange Commission Rule 2a7-like external investment pool, are reported at amortized cost."


The question is, does this $17.9 billion in investments include State money, component units money, the Local Government Surplus Funds Trust Fund, or all or a portion of the above?


It is a lot of money and would greatly increase the per capita surpluses if all or a portion was considered State or component unit money.


Note: For those familiar with governmental accounting, for surpluses we basically used GFOA Balance Sheet Account Classification Codes 101, 102, 103, 151, 153, and 170.

USAF Image

This report was prepared by:
Gerald R. Klatt
Lieutenant Colonel, USAF, Retired



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